you have just purchased an investment that generates the fol

you have just purchased an investment that generates the following cash flows for the next four years. you are able to reinvest these cash flows at 8.1 percent compounded annually

end of year

1. $361

2. $2607

3.$576

4. $3392

what is the present value of this investment if 8.1 percent per year is the appropriate discount rate?

Solution

Present value of the investment=361/1.081+2607/1.081^2+576/1.081^3+3392/1.081^4=5504.887082